No bad-faith or punitive damages for Keays

Honda only on the hook for pay in lieu of notice after lower courts’ awards are struck down by SCC

By Jeffrey R. Smith

07/17/2008|Canadian Employment Law Today

The Supreme Court of Canada has struck down bad-faith and punitive damages against Honda Canada in a landmark wrongful dismissal case dealing with employee absences related to a disability.

The Ontario Superior Court of Justice and the Ontario Court of Appeal both found Honda discriminated against employee Kevin Keays and acted in bad faith by refusing to accept doctor’s notes that said his frequent absences were due to chronic fatigue syndrome (CFS). It demanded notes for every CFS-related absence and asked him to attend its own medical assessment. When Keays declined to meet with the company doctor and retained a lawyer, Honda fired him.

The Supreme Court of Canada, in a decision released in June, agreed Keays was wrongfully dismissed and upheld the 15 months’ pay in lieu of notice awarded by the trial court. However, in a 7-2 decision, the court struck down the extra nine months’ bad-faith damages and $100,000 in punitive damages, because it said Honda did not act in bad faith and was within its rights to rely on the opinion of its own medical experts. In stripping the bad-faith, or Wallace, damages, the Supreme Court said this type of damages should only be applied if the employer’s conduct directly caused damages resulting in a loss to the employee. The court also said punitive damages were only justified in situations where the employer’s actions were particularly outrageous and malicious.